The relationship between unemployment and inflation in the Turkish economy: Analysis of the years 1983-2020

It is the unemployment rate and inflation rate, leading the economic indicators that help to predict the progress of a country's economy and the level of prosperity of the country. The relationship between these indicators is defined as the Phillips Curve in economics theory. In this context, the Phillips Curve is at the top of the topics discussed in the literature. The discussions of the relationship between indicators have a long history in this sense. In fact, the diversity of the results of the work is also making these discussions continuous today. In this study, the relationship between unemployment and inflation rates, which have caused severe damage to the country's economy and sociology in terms of the significant consequences and effects for each country's economy, has been tested for the Turkish economy. The purpose of the study is to investigate whether the Phillips Curve is valid for the Turkish Economy and how and in what direction it affects each other if it is valid. In this context, in the study that includes the years 1983-2020, the relevant variables were primarily examined in a theoretical framework, and then the answers to the questions were sought in the light of time series analysis by using the annual data of these variables in the relevant years. In the analysis, ADF and PP unit root tests, VAR analysis, Engle-Granger Cointegration and Granger Causality tests were used respectively. The findings of the study are that inflation and unemployment rates are integrated, that there is a long-term relationship between the series and it was determined that there was a one-way causality from inflation to unemployment, The Phillips Curve has been theoretically validated for the Turkish Economy within the relevant years.